Since Blockchain technology entered the mainstream consciousness, its potential in traditional financial services and ability to disrupt existing industries has been widely discussed. Areas such as retail, trade, logistics and syndicated loans remain incredibly convoluted with many phases of verification and confirmations before transactions are completed. Blockchain tech can streamline these processes and bring similar value to what the internet did for the information age.

Less understood is blockchain’s potential in cryptocurrency transactions. By definition, their deployment is less evolved when compared to their regulated counterparts. Executing trades, hedging currency swaps, binary options, and posting contracts are more established with fiat services.

Peer-to-peer Decentralized Cryptocurrency eXchange (DCX) allow peers to hedge, speculate or trade different cryptocurrencies based financial instruments such as Spot, Swap, Forward, and Loans. DCX’s are typically based on Ethereum smart contracts, where trading parties agree on all parameters without the need for third-party remediation. Smart contracts aim to provide additional security to traditional contract engagements and reduce transaction costs.

As a crypto trading platform, DCX’s will evolve in step with rapid changes in the blockchain industry; its initial phase will offer a Crypto Spot financial instrument, meaning cryptocurrencies that are traded on-the-spot. The spot exchange rate is the price to exchange one currency for another for immediate delivery, representing the price buyers pay in one cryptocurrency to purchase a second one. The spot exchange rate is for delivery on the earliest value date. The aim is to complete this process in near real-time, revolutionizing the standard settlement offered by traditional banks, which can frustratingly take several days.

Forward contracts are another service DCX’s aim to disrupt. This instrument is when two parties buy or sell an asset at a specified price on a future date. A crypto forward can be used for hedging or speculation; however, its non-standardized nature makes it particularly appropriate for hedging. Unlike standard futures contracts, this one can be customized to any commodity, value and delivery date.

This new and relatively unexplored area of digital currency swaps is an area of crypto finance that DXC’s aims to address. Traditionally, foreign exchange swaps take place when bankers agree on a certain price for the currency to be exchanged. Crypto Swaps allows for digital currencies to be used to fund charges designated in another cryptocurrency, without acquiring foreign exchange risk, allowing companies to manage various digital currencies more efficiently. In addition, these instruments enable traders to sell a contract to option holders that give them the right, but not the obligation, to buy or sell a cryptocurrency at an agreed-upon price, during a certain time period. Crypto smart contracts enable traders to agree on when to buy and sell digital assets, currencies, and holdings when set parameters have been reached.

The impact of blockchain on traditional financial services will be huge. A recent report by Accenture1 cited that eight of the world’s largest banks could potentially save 8 billion US$ on a cost-base of 30 billion US$[i], by improved centralize finance reporting, savings on compliance, operational costs, and business operations. This costs saving doesn’t even take into account improved service times, stronger capital bases and greater accessibility for opportunities in unbanked areas of the world.

Services such as Adel’s iFin (www.adel.io) aims to evolve crypto trading beyond banks that are rooted in legacy supply chains and physical infrastructure. DCX’s have the potential to be the digital interface where anyone, irrespective of their geolocation and experience, can log in, execute trades, and agree on smart contracts that suit their individual needs. By doing this, DCX empower people to build their portfolio, without expensive intermediaries and weighed infrastructure inefficiencies. Crypto has exposed a market gap of users wanting unabated access to an interoperable cross-blockchain platform, enabling an ecosystem of users anywhere in the world to interact and trade, free from brick and mortar intermediaries. Its potential applications are limitless.

About the Authors

Gabriel is a sales and marketing expert with over 25 years in senior positions at Motorola, VeriSign (acquired by Symantec in 2010 for 1.250 billion US$), and SecureWorks (acquired by Dell in 2011 for 612 million US$), and Cognitive Security (acquired by Cisco in 2013 for 25 million US$). He is a blockchain entrepreneur, with strengths in international business strategy. Gabriel has a bachelor’s degree in Engineering Physics from McMaster University in Canada and expert knowledge in blockchain incubation, cloud computing, IT security, and video streaming, and Over the Top Content (OTT). Gabriel also runs his own company, Euro Tech Startups s.r.o., and manages a professional blog at https://dusil.com.

John has spent nearly a decade working for a number of leading public relations firms in London, focusing primarily on PR management in the financial services sector. John’s expertise includes blockchain technology and the evolution of cryptocurrencies in financial services. That’s why he recently founded his own consulting firm, JEA Associates Ltd., which is specifically positioned to communicate the value proposition of this burgeoning technology. John has spent the past year successfully executing campaigns for a digital currency consultancy, decentralized financial solutions, and online payments platforms.

For centuries, the exchanges of London, New York, Frankfurt, and Tokyo have dominated the buying and selling of equities, commodities and other asset classes. Although technology has improved over the years and people can engage with these markets from the comfort of their own home, the core premise of a centralized exchange has remained the same. The dawn of Blockchain has the potential to radically disrupt the way traditional exchanges operate and the way in which clearing services carry out their functions. The ‘Distributed Ownership’ nature of blockchain could be transformative through the effective use of distributed ledgers.

Given cryptocurrencies didn’t even exist a decade ago (unlike their traditional fiat exchanges which have operated for more than 200 years), existing exchanges are less evolved and unable to execute in heavy trading conditions, compared to more established equities. Brownouts and service blackouts are a reflection of the immaturity in crypto markets. Many exchanges experience service disruptions because they haven’t created an ideal load balancing architecture or high availability contingencies.

Despite these initial discrepancies, the design of Decentralised Cryptocurrency Exchanges (DCX) could provide insight into the future of equity trading and how people engage with markets and claim ownership of their assets. As it stands today, centralized exchanges are governed by laws and regulations in the countries where they are registered. Participants have to abide by a set of rules that may forsake the control of their assets, use of private data, or even risk devastating security breaches. It’s no coincidence that crypto liberalists avoid centralized platforms when building blockchain infrastructures.

Decentralized platforms, on the other hand, are still at the starting gate, in terms of development maturity. Regardless, they have the foundations to be adaptable and scale well, due to their inherent distributed architecture. Instead of having the oversight of national governments and regulatory bodies, they are governed by communities and can adapt to exceed the resilience of the most advanced centralized platforms. By definition, this technology isn’t hardened from an IT or security perspective, compared to mainstream exchanges. For example, Nasdaq can process one million transactions per second (tps), where most crypto exchanges struggle to process up to 100,000 tps- however, DCXs offer a viable alternative that enables tradable assets without the vulnerabilities of centralized control.

There are those who argue that introducing middle-men into the crypto supply-chain would help to facilitate widespread adoption. But crypto liberalists prefer to eliminate their function, even if they serve to increase ease-of-use, stability, reliability and other features that may not be easily accessible in their absence. Exchange services, for example, can be viewed as a classic middle-man service, directly in conflict with this core ideology. These intermediary services inevitably become the catalyst to global adoption where cryptocurrency trading needs to reach mass-market potential. Furthermore, decentralized exchanges can be accessible to anyone in the world. Challenges, however, remain in the areas of market volatility, regulatory compliance, and security best practices before this can take place.

There are also legal issues, as investors suffer when an exchange is shut down due to non-compliance. The issue here is the single point of failure when centralized services store large sums of wealth and sensitive information. Until relevant legal structures and safeguards are created, mainstream consumers will hesitate to trust the Blockchain as a repository for their money. Then there is a looming threat of protecting personal wealth from hackers, phishing attacks, malware, and zero-day attacks, adding further Fear Uncertainty and Doubt (FUD).

In many ways, the discussion regarding regulatory oversight and protective legal controls cuts to the core of the Blockchain debate. Crypto libertarians dream of a world free from big brother and are willing to accept the risks that come with that. Will there be a balanced equilibrium of regulations that protect consumers in the wild-west of virtual currencies? Will governments allow their central banks to be sidelined as virtual currencies to grow from infancy to maturity?

The relationship between free markets and collective responsibility has been one of the driving economic and political forces in history. The advent of Blockchain technology has contributed yet another dimension. The impact of decentralized services on existing financial systems and regulatory oversight remains to be seen. In the meantime, stakeholders have never had a greater opportunity to take ownership of their financial future, even if that path remains volatile.

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If you liked this article and would like to read more in this series, then check them out here:

About the Authors

Gabriel is a sales and marketing expert with over 25 years in senior positions at Motorola, VeriSign (acquired by Symantec in 2010 for 1.250 billion US$), and SecureWorks (acquired by Dell in 2011 for 612 million US$), and Cognitive Security (acquired by Cisco in 2013 for 25 million US$). He is a blockchain entrepreneur, with strengths in international business strategy. Gabriel has a bachelor’s degree in Engineering Physics from McMaster University in Canada and expert knowledge in blockchain incubation, cloud computing, IT security, and video streaming, and Over the Top Content (OTT). Gabriel also runs his own company, Euro Tech Startups s.r.o., and manages a professional blog at https://dusil.com.

John McLeod, Public Relations, Adel

John has spent nearly a decade working for a number of leading public relations firms in London, focusing primarily on PR management in the financial services sector. John’s expertise includes blockchain technology and the evolution of cryptocurrencies in financial services. That’s why he recently founded his own consulting firm, JEA Associates Ltd., which is specifically positioned to communicate the value proposition of this burgeoning technology. John has spent the past year successfully executing campaigns for a digital currency consultancy, decentralized financial solutions, and online payments platforms.

In the revolution of emerging blockchain technologies, shifting from legacy models and habits to embrace this paradigm shift, occurs in iterations. Arguably, the most significant aspect of blockchain is decentralization, which allows for programmable trust, distributed ownership, and removes the necessity for third-party arbitration.

Money is flooding into cryptocurrency, seen by a market cap increase from 18 billion US$ to more than 600 billion US$ just in 2017. That is a 240 fold increase. With 99 percent of transactions still residing in centralized exchanges (Coinmarketcap.com), the shift to fully decentralized platforms is just on the horizon. Several major catalysts are contributing to the move to decentralized cryptocurrency exchanges, also known as DEXs.

DEXs are superior in security and provide instant account creation. However, in their current state of development, they lack liquidity and their user experience and user interface (UX/UI) are still immature compared to their centralized counterparts. Generally speaking, the more liquid the market, the less volatility, and price manipulation, making DEXs vulnerable at this stage. At the moment, investors are still walking a thin tightrope between friction and fluidity, causing growing pains before mass-market adoption.

To understand the importance of this shift and what it means, we should understand how centralization affects the investment ecosystem, and explore the development steps needed for DEXs to reach their full potential. Centralized exchanges are platforms that allow investors and traders to buy, sell and exchange cryptocurrency against fiat or other crypto assets. Traders deposit funds and the exchange issues an IOU that is freely tradeable on their platform. When a trader wants to withdraw funds, the IOUs are converted back to currency and returned to the trader.

Centralized exchanges are an on-ramp for people with fiat currency (i.e. dollars, euros, yen or otherwise) to purchase cryptocurrency. While these exchanges allow movement from fiat to crypto, they are a prime target for hackers and have been taken for billions of dollars. Exchanges which follow regulatory guidelines have lengthy registration processes which further hinders investment speed. They also have service lags (brownouts or blackouts), and maybe susceptible to government shutdowns.

DEXs shift investments from a centralized third party to peer-to-peer transactions, through proxy tokens or assets or a multi-signature escrow system, among other solutions being developed. This allows investors to remain, sole custodians of their funds, rather than relinquish their private keys (the passwords used to secure their accounts) to centralized exchanges. DEX benefits include instantaneous account creation, elevated privacy, and decentralized server resilience, ensuring that the infrastructure cannot be shutdown.

If DEXs are the next evolution, why only a one percent market adoption? To begin with, the DEX concept is brand new. As centralized exchanges proceed through their own market maturity lifecycle, decentralized services are only at the starting gate. Because DEXs are blockchain driven, account control resides solely in the hands of the trader. If they lose their private key, or make a mistake when entering a buy or sell order, then there is no recourse – liability resides exclusively with the account holder, and there can be no finger-pointing. In addition:

Margin lending and other more advanced trading options are not yet available on DEXs.

There is a chicken-egg effect at play, resulting in low liquidity. Since transactions happen on the blockchain itself, there may be issues of scaling pressure if the connected blockchains have not been architected well.

Miners can see the blockchain transactions before they are cleared, resulting in front-running risk and market manipulation.

Fiat to crypto trading in DEXs will require the cooperation of banks which introduces a new centralized point of failure.

The list of challenges for DEX developers is long, however, they are making quick progress. Developing user-friendly interfaces (UX/UI) continues. Issues like liquidity, scalability and front-running are being solved with new technology models such as relayers, off-chain transactions, hardware-wallets, as well as using a hybrid of centralized and decentralized exchanges to pool liquidity.

Although development is happening at lightning speed, trading performance highlights o a huge gap in the market. While NASDAQ processes one million transactions per second, centralized crypto exchanges average just ten thousand per second. If development is any indicator of velocity, crypto exchanges estimate a ten-fold improvement in the next 12 months.

Progress continues and the momentum is starting to shift in the direction of DEXs, the next evolution of cryptocurrency investment. Those who can iterate the quickest, will unleash full speed liquidity and capitalize on the decentralized nature of blockchains.

▲ Adel ▲ Opinions

If you liked this article and would like to read more in this series, then check them out here:

About the Authors

Gabriel is a sales and marketing expert with over 25 years in senior positions at Motorola, VeriSign (acquired by Symantec in 2010 for 1.250 billion US$), and SecureWorks (acquired by Dell in 2011 for 612 million US$), and Cognitive Security (acquired by Cisco in 2013 for 25 million US$). He is a blockchain entrepreneur, with strengths in international business strategy. Gabriel has a bachelor’s degree in Engineering Physics from McMaster University in Canada and expert knowledge in blockchain incubation, cloud computing, IT security, and video streaming, and Over the Top Content (OTT). Gabriel also runs his own company, Euro Tech Startups s.r.o., and manages a professional blog at https://dusil.com.

Jessica Zartler, Crypto Marketing

Jessica is an award-winning multimedia journalist, content strategy expert and digital marketing consultant with more than ten years of experience. Her work has appeared on several platforms including Forbes, The Associated Press, The Wall Street Journal, MSNBC, Fast Company, and Entrepreneur. Fascinated by the burgeoning blockchain space, she loves to contribute to educational communication about the potential of this new technology for revolution, and the incentivization of fair, inclusive, and environmentally conscious business practices.

One of the great surprises of the Blockchain revolution is that banks continue to occupy a near-monopolistic position within financial services, despite their obvious and much-publicized inadequacies. In the UK alone, five high street banks account for 80 percent of SME businesses, and control over 80 percent of domestic bank accounts. Even with the advances made with the digitalization across communications, media and computing industries, their hold remains as tight as ever.

Traditionally this stranglehold has been attributed to high barriers-to-entry, not least regulation and capital ratios for potential lenders. However, in an era where anyone with a car can become a taxi driver and anyone with a spare room can become a guest house, it’s realistic for people with spare cash to become a lender. Since the Renaissance, banking has been carried out on an institution-to-consumer basis or an institution-to-institution basis. Legal and accounting frameworks governing banks have, by and large, remained the same for half a millennia. In fairness, there have been some useful inventions pushing the financial agenda forward – such as online banking, ATMs and credit/debit cards – however, the benefactors of these financial systems reside overwhelmingly in the developed world. With over two billion unbanked in the world, the need for a more equitable and inclusive approach has never been greater.

The use of blockchain technology, particularly smart contracts, has the potential to disrupt the entire retail banking sector, creating a decentralized peer-to-peer network that enables people to borrow and lend in a more streamlined manner. Programmatically settling pre-agreed terms and conditions between two parties was not possible just a few years ago. This is still contingent on account holders willing to take on the same risks as banks, evaluate creditworthiness, pre-arrange written contracts with customized terms and conditions, and at what rate. When these parameters are met then money can be automatically paid, without the need for a human intermediary. This is the basis of smart contracts.

The benefits of blockchain for retail lending encouraged greater competition. Financial monopolies are finally challenged by virtual currencies, and billions of people in developing markets can have access to loans that were previously too expensive or inaccessible.

The current centralized financial industry has enormous disparities in global lending interest rates. Today, the inflation-adjusted interest rate in different countries varies based on available liquidity. In high liquidity markets such as Europe, interest rates are between 0.5 to 5 percent. In lower liquidity markets such as Russia, they are at 12 to 15 percent, 12 percent in India, and as high as 32 percent in Brazil. These dramatic differences demonstrate a clear inequality. Interest rates for microloans in developing countries are between 30 to 40 percent on average, making borrowing impractical. Interest rates for decentralized lending on the blockchain is a streamlined solution to this disparity. Consumers from developing countries can have access to the same lending services as people from highly liquid markets.

These benefits go beyond just fairness and inclusivity. Blockchain radically improves on the problems associated with legacy systems, transaction latency, and transparency. It still takes three working days to approve loans or transfer money between cross-border accounts. In blockchain this transaction is carried out in minutes, using just an internet-connected smartphone.

For the first time in history blockchain service providers (BSP) have the potential to create a fairer and more inclusive lending environment. Dated infrastructures, fragmented governance, and economic borders are often cited as to why financial lending fails on a global scale. A recent report by McKinsey cited that Blockchain technology and inclusion in the digital economy could boost the GDP of all emerging economies by six percent. That translates to $3.7 trillion by 2025. The role of retail banks, in both developed and developing markets, in promoting sustainable and fair services has been questioned. Accessibility, fair terms, and transparency have denied large chunks of the world’s population to banking services that developed countries have enjoyed for decades. Smart contract technology provides the solution to disrupting this elitist source of finance. The potential gains and benefits to global economics and society are on the horizon. The question remains: Will people take advantage of it?

▲ Adel ▲ Opinions

If you liked this article and would like to read more in this series, then check them out here:

About the Authors

Gabriel is a sales and marketing expert with over 25 years in senior positions at Motorola, VeriSign (acquired by Symantec in 2010 for 1.250 billion US$), and SecureWorks (acquired by Dell in 2011 for 612 million US$), and Cognitive Security (acquired by Cisco in 2013 for 25 million US$). He is a blockchain entrepreneur, with strengths in international business strategy. Gabriel has a bachelor’s degree in Engineering Physics from McMaster University in Canada and expert knowledge in blockchain incubation, cloud computing, IT security, and video streaming, and Over the Top Content (OTT). Gabriel also runs his own company, Euro Tech Startups s.r.o., and manages a professional blog at https://dusil.com.

John McLeod

John has spent nearly a decade working for a number of leading public relations firms in London, focusing primarily on PR management in the financial services sector. John’s expertise includes blockchain technology and the evolution of cryptocurrencies in financial services. That’s why he recently founded his own consulting firm, JEA Associates Ltd., which is specifically positioned to communicate the value proposition of this burgeoning technology. John has spent the past year successfully executing campaigns for a digital currency consultancy, decentralized financial solutions, and online payments platforms.

Adel, an infrastructure aimed at developing, supporting and funding innovative startups using blockchain technology, announced its plan today for a month-long ICO which will open on the 1st of March, 2017. The Adel ecosystem consists of stakeholders, registered community members, staff, the Project Review Committee, and the Adel Board. Their vision is to create an ecosystem of innovative projects where members can participate in, mentor, and improve project plans. Adel offers a decentralized alternative to traditional venture capital funding, angel investments, and other established financial sources.

Co-founder and Board member, Gabriel Dusil comments, “We’re lucky to have this opportunity to introduce Adel to the evolution of blockchain technology. Our research team has identified an exciting untapped market opportunity: providing parties interested in innovation with a community-based infrastructure to participate in long-term projects. By leveraging the emergence of blockchain as a service (BaaS), we created the Adel ecosystem so that participants have a collaborative platform to initiate, develop, showcase and fund their innovations.”

Adel is a global community that is self-regulated, self-sustained, and offers its own economic ecosystem using the Adelphoi cryptocurrency token. Adel is built on Nxt, the leading decentralized blockchain as a service platform, and Ardor, which is the next evolution of Nxt’s technology. Participation in startups will be decided by the Adel community, while successful ventures will be developed and issued as rewards to Adel’s stakeholders. The community and stakeholders will have the opportunity to introduce use cases that involve blockchain technology.

Jan Lamser, Co-founder and Board member adds, “We are very excited by the prospects of blockchain technology transforming many industries. The momentum created in distributed ledger solutions is impressive. There is a lot of energy and diversity amongst entrepreneurs in the FinTech industry who are looking for ways to harness blockchains. All too often, traditional approaches to mobilizing resources miss out on the potential of startups. Adel provides a forum of like-minded parties who understand these needs.”

High levels of integrity, ethics, compliance, and security are of the utmost concern for Adel’s founders. Ultimately, it is the collective vote of Adel’s members that decide which projects are launched and supported. Served by a staff of 18 people and still growing, Adel will empower the community and its members. Their mandate is to evaluate startups and provide guidance to the community.

Adel is a technology incubator for blockchain innovation – Dedicated to delivering a resilient ecosystem for its community. Adel is an infrastructure aimed at developing, supporting and funding innovative startups using blockchain technology. The ecosystem consists of stakeholders, community members, staff, a Project Review Committee, and the Adel Board. Its aim is to support projects where members can participate, mentor, and improve their business plans. Adel will harness blockchain as a service (BaaS) to create a collaborative platform for developing, showcasing and funding innovations. Adel is built on Nxt, the leading decentralized blockchain as a service platform, and Ardor, which is the next evolution of Nxt’s technology.

Unauthorized use and/or duplication of this material without express and written permission from this site’s author is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Gabriel Dusil and dusil.com with appropriate and specific direction to the original content.